Chart of the Day: Post-Massive Bear Market Rallies
Today’s chart illustrates rallies that followed massive bear markets. For today’s chart, a ‘massive’ bear market is defined as a decline of greater than 50%. Since the Dow’s inception in 1896, there have been only three bear markets whereby the Dow declined more than 50% (early 1930s, late 1930s until early 1940s, and during the recent financial crisis).
Today’s chart also adds the rally that followed the dot-com bust during which the Nasdaq declined 78%. The current Dow rally has followed the post dot-com bust rally of the Nasdaq that began back in 2002 fairly closely and held to a general post-massive bear market rally pattern — rally during the first 300 trading days, trade in a relatively flat choppy manner up until around 600 trading days and then re-embark on the second leg of the rally. History may not repeat, but it rhymes.
Notes:
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3 Comments
ah ah ah
another clown that seems to know where stocks will be in the future
why these so smart guys are not richer than mr. buffet ?
Good question, but the underlying implication that I like better is the 20% upside still remaining this year
It’s too bad that I had not seen this chart a few months ago. I would have been “all in” on this latest equity rally. But now it appears so overbought, and we seem to be in that phase where we will “trade in a relatively flat choppy manner up until around 600 trading days”, if we end up rhyming with past rallies post bear-market.